JAKARTA: Bank Indonesia Wednesday set two rupiah intervention

JAKARTA: Bank Indonesia Wednesday set two rupiah intervention
rates - departing from its usual practice of just setting one -
to contain sudden surges in liquidity in the money market, a
central bank official said.

This is a new policy, the official, who declined to be named,
said.

The intervention rate - or the rate that the central bank pays
commercial banks for funds placed with the monetary authority -
was at 12.625 percent in the morning, the official said.

But in the afternoon, the rate was halved to 6.3125 percent,
the official said.

Commercial banks usually dump relatively huge amounts of
rupiah funds with the central bank in the afternoon, if they fail
to lend them out at favorable rates in the money market.

Bank Indonesia wants to discourage banks from doing just that,
the official said, by setting a lower intervention rate in the
afternoon.

The central bank doesn't want to pay out so much cash at one
go, the official added. -- Dow Jones

U.S. industrial activity drops

WASHINGTON: Industrial production fell by 0.3 percent in
August, the first decline in eight months, a fresh sign of the
faltering economic recovery.

The latest snapshot of industrial action at the U.S.
factories, mines and utilities reported by the Federal Reserve
Tuesday was much weaker than the performance many analysts were
expecting. They were forecasting a rise in industrial production
of around 0.1 percent or 0.2 percent.

The 0.3 percent drop was the first decline since December,
when the nation's economy was still trying to claw its way out of
a recession that began in March 2001.

"It is a setback, but hopefully only a brief one," said Carl
Tannenbaum, chief economist for LaSalle Bank.

The weak performance in August came after industrial activity
rose by a modest 0.4 percent in July, according to revised
figures. That increase was twice as big as the 0.2 percent
advance the Fed previously reported. - AP

China's forex reserves hit $253b

BEIJING: China's foreign exchange reserves hit US$253 billion
at the end of August, state media said Wednesday, citing central
bank governor Dai Xianglong.

The country's reserves, reported by the central bank-run
Financial News daily, were up $40.8 billion since the beginning
of the year.

The vast majority of China's foreign reserves, the second-
largest in the world after Japan's, are in U.S. dollars, while
the euro makes up an undisclosed share.

Governor Dai said earlier this year the euro was the second
largest currency in its reserves but declined to provide details.
-- AFP

ADB to increase lending to China

MANILA: The Asian Development Bank (ADB) said Wednesday that
it planned to increase its annual lending to China by 50 percent
to US$1.5 billion starting next year.

The increase in lending for 2003-2005 is aimed at helping
China restructure its economy and reduce poverty in its central
and western regions, a bank statement said.

More than 90 million Chinese still live on less than a dollar
a day, down from twice that number in the 1990s, it said.

The ADB is to finance road and rail projects in the provinces
of Gansu, Yunnan, Ningxia and Sichuan, it added.

It will also finance projects to develop cleaner sources of
energy, and improve management and conservation of soil and
water, the bank said. -- AFP